Car insurance indemnity question for the pros

In My Humble Opinion
1

I suspect I don’t have all the details of this situation. I have a family member who has a checkered driving history and some run-ins with the law, and this is his deal so I’m getting it second and third hand. But here are the facts:

  • Driver D is going normal speed, has a green light
  • Municipal vehicle of some kind (MV) turns left on green directly across driver’s path
  • D swerves, successfully avoids turning MV, is unable to avoid collision with roadside hazards, wrecking D’s car
  • MV, knowing they caused the wreck, calls police and (it seems) essentially admits fault & is cited
  • D car is totaled
  • (some uncertainty about what/whether any communication occurs here)
  • Junkyard starts trying to bill D a daily fee, D understands car is totaled, sells vehicle for scrap

The last step is the problem here. What I think has happened is that D, not knowing that the other driver basically offered himself up as being at fault, just assumed he was screwed and didn’t inquire into his options. He is very squirrelly about law enforcement and, like, bureaucracies, so I’m not sure to what extent anybody tried to apprise him of the situation or at what time. But my understanding is he didn’t know the other driver was out there and had been cited, he didn’t have the hundreds of dollars a day to keep the wreck just sitting in the junkyard, and so he sold it, and now his insurance company is saying basically that he’s fucked irrespective of what the market value of the car was, and whether they could have been indemnified if he still had the title.

So that’s my question - is that true? If you’re driving a $15K car, you wreck it in a one person accident for which someone claims responsibility, and you sign over the car to the scrap yard not knowing the other driver has done so, is the difference between the FMV of the car and the scrap value just gone forever? Isn’t your loss still the same, minus the scrap value, and still caused by the other guy?

Thanks for any insight.

2

He should have immediatly called his own insurance company at the time of the wreak. That is what they are paid for. They would have taken care of interacting with the MV insurance, the junk yard, towing company etc. Assessing the damage to his car, deciding to total it out or repair it, and deciding whatever settlement price they would give for the car. But they needed to look at the car first. And work with the MV insurance to settle liability issues.

Instead he sold it to the scrap/junk yard. Without involving his insurace company. That money is all he is going to get.

3

Former insurance adjuster here, although not in a decade, so going to be behind the times, and please keep in mind, it’ll depend on the insurance company in question as well.

Yes, D is screwed. As @Dallas_Jones put it,

No carrier is going to take someone’s unsupported word about the state of the car prior to the loss. Looking at it after the loss is hard enough, but you can get a definite idea of what if any damage was pre-existing (partial repairs, rust, paint, etc) as well as mileage and other condition cues. You’d then get comps based on all of the above to establish a TLS (Total Loss Settlement). Generally what would happen then is that the owner of the vehicle would be given an offer of the TLS where they sign over the vehicle remains or they’d get to keep the vehicle and the salvage value would be deducted from the TLS above.

I’d done some minor haggling over a TLS if the insured had evidence of additional value, for example, a recent receipt showing they’d just put on 4 new tires, or other work, but again, it HAD to be documented or easily established by even a casual visual inspection.

If D had just taken the vehicle to a show or something equally ‘out there’ and could provide good third-party visual evidence, the adjuster might dicker a little, but to be honest, most used vehicles (even in the current buyer’s market) aren’t worth a great deal, especially when you’ve already settled for the salvage value. At a guess, the third party insurance will do a comp based on a ‘poor’ or ‘terrible’ condition year / make / model match, and possibly offer a settlement based on that value minus a generous estimate of what the actual salvage would have been.

Result, likely little if anything.

But as @Dallas_Jones and other posters in the know have said, always, always try to get your own carrier involved. Because even if you don’t have COMP/COLL/UMPD that would cover your vehicle, you never know if the third party who admits fault at the scene is going to say the same when contacted by their own insurance. They may be claiming it’s your fault, and you want to be prepared.

For that matter, D should STILL contact their own carrier with the supporting docs, because as described (third hand, I know) to the carrier, it may look like a single-car accident - which are almost always treated as At Fault accidents without additional documentation. And thus end up in increased insurance rates for D on top of everything else. Absolutely better to do this sooner than later, and ideally with a copy of the PR or third party carrier’s admission of responsibility.

If nothing else, if it turns out D actually had COLL coverage, the carrier may be more willing to do a minor settlement as above, but probably more generous, as they have every reason to expect to recover the loss from the municipal driver.

4

Since he (D) doesn’t necessarily need to deal with his own insurance company here, he should reach out to the police department and seek the incident report (if it exists) along with the citation to the MV driver. Once that’s in hand he should reach out to the city attorney for the municipality and file a claim for the difference in the market value of his vehicle at the time of the accident (obtained from Kelly Blue Book atc. and the scrap value he received, (assuming D has the documentation of this). The city should be responsible for the damages caused by their employee as documented by the police report. If the municipality decides to turn this over to their insurance carrier, that’s their decision, but that shouldn’t absolve them of their liability.